True or false: the elasticity of demand for any good or service generally remains unchanged as you move up or down a demand curve

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10-03-2018
Business

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True or false: the elasticity of demand for any good or service generally remains unchanged as you move up or down a demand curve

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brokenheart1 brokenheart1 · Answer 1 · 2018-03-10T08:32:52+01:00

Because the price elasticity of demand shows the responsiveness of quantity demanded to a price change, assuming that other factors that influence demand are unchanged, it reflects movements along a demand curve. With a downward-sloping demand curve, price and quantity demanded move in opposite directions, so the price elasticity of demand is always negative. A positive percentage change in price implies a negative percentage change in quantity demanded, and vice versa. Sometimes you will see the absolute value of the price elasticity measure reported. In essence, the minus sign is ignored because it is expected that there will be a negative (inverse) relationship between quantity demanded and price. In this text, however, we will retain the minus sign in reporting price elasticity of demand and will say “the absolute value of the price elasticity of demand” when that is what we are describing.